Sparta Area Fire District looks at $1.7M loan
In order to address its aging fleet, the Sparta Area Fire District Board is looking to borrow $1.7 million to purchase four new vehicles.
Sparta Alderman Jim Church, who is the city's representative on the fire board, gave an update to the finance committee last week. The fire district's long-range planning committee pitched the idea last summer calling for a $2 million loan as the initial leg of a 30-year plan to replace a number of big-ticket items. That plan called for four projected borrowings spaced out over that time period.
Church told the finance committee that the goal now is to borrow $1.7 million to put the fire department on track with equipment purchases and then build up a fund for future equipment expenses.
The $1.7 million loan would be to purchase two engines, a rescue squad vehicle and a tender. All four vehicles are well over 20 years old, the average lifespan for that type of equipment.
The loan would be paid off as a special assessment on property tax bills. The fire district includes the towns of New Lyme, Little Falls, Angelo, Sparta, Lafayette, Adrian, Wells and Leon and the City of Sparta.
The estimated special assessment would be for around $15 per $100,000 of assessed value and would show up on fire district residents' tax bills for the 10-year term of the loan. Church said the fire board would prefer to work with local financial institutions but it has also conferred with Robert Baird & Company to investigate outside lenders.
"We're going to go with the best rate we can get," he said. "We've got to do what's right for the residents."
However, he didn't believe Baird would be able to match local lenders because of the fees it charges.
Church said the fire district could avoid the any new rounds of borrowing by maintaining a consistent mill rate and using its budget surplus to build an equipment replacement fund.
Last year, the department had $21,000 left over at the end of the year and Church said with the purchase of the new equipment, its $70,000 annual maintenance fund could be reduced by half with that money also going into the equipment fund.
In addition, a $40,000 annual debt payment on a loan for its ladder truck is scheduled to retire in the next few years, so that money also could be diverted to the equipment replacement fund.
Another thing to consider, according to Church, is the department's Insurance Service Organization (ISO) rating, which is used to set insurance rates for property. The ISO takes into account the equipment a department has, its personnel and response times.
The Sparta Area Fire District currently has a class three rating, but Church said the City of Sparta will be at a two when the next ratings come out. In this area, only the La Crosse Fire Department is better and that is due to its full-time status, said Church.
Once the fire district settles on its borrowing plan it will have to go before the municipalities for final approval.